The Independent Community Bankers of America (ICBA) has expressed strong opposition to the Federal Housing Finance Agency’s (FHFA) conditional approval of Freddie Mac’s proposal to engage in a pilot program to purchase certain single-family closed-end second mortgages. ICBA President and CEO Rebeca Romero Rainey issued a statement on June 24, 2024, highlighting concerns over the decision.
"ICBA and the nation’s community banks are deeply concerned with the FHFA’s announcement that Freddie Mac — which has been in federal conservatorship for more than 15 years — will enter a market that is already liquid and well served by private-sector community banks," Romero Rainey stated.
Romero Rainey further referenced a comment letter sent by ICBA to the FHFA last month. The letter argued that "Freddie Mac has failed to establish or justify a market need for this product, with single-family closed-end second mortgages readily available in the private sector." It also noted potential negative impacts on housing supply for new homebuyers amid challenging interest rate conditions and criticized Freddie Mac for not providing sufficient details regarding pricing, property valuation, and risk management.
"This product will only further delay Freddie Mac’s exit from conservatorship by diverting resources and requiring additional credit risk mitigation that would keep it from retaining appropriate levels of capital," Romero Rainey added.
She concluded by urging the FHFA to avoid disrupting the private sector further and to return Fannie Mae and Freddie Mac to private ownership as stipulated by the Housing and Economic Recovery Act of 2007.
The ICBA's mission is to create an environment where community banks can flourish through advocacy, education, and innovation. Community banks play a crucial role in local economies by channeling deposits into neighborhoods, creating jobs, fostering economic prosperity, and supporting their customers' financial goals.
For more information about ICBA, visit their website at icba.org.